Brent crude closed at US$113.88 a barrel on October 27, about 58% above the roughly US$72 it traded at before the war with Iran began. It reached US$116.72 on October 23, the highest close in the series, and was trading near US$111 early on Wednesday. The price now carries two things at once: stalled talks in Tehran and a record month of attacks on ships near the Strait of Hormuz.
The Canadian link is direct. Gasoline prices rose 27.8% from a year earlier in September, according to Statistics Canada figures reported by investingLive, and the Bank of Canada announces its rate decision at 9:45 a.m. ET today. Canadian energy equities and the Canadian dollar are the other two places where the oil price shows up in a portfolio.
The gap between Brent and WTI has widened from US$4.83 on July 28 to US$13.98. That gap is the most useful number for a Canadian reader.
Brent has climbed 35% since late July while WTI has climbed 26%, and the shaded week of October 5 to 11 is when attacks on ships were at their peak.
Daily closing prices for front-month Brent and WTI futures, July 28 to October 27, 2026. The shaded band marks October 5 to 11, the week with the most ship attacks since the war began, and the dashed line marks the roughly US$72 level at which Brent traded before the war.
The Market Is Pricing a Decision, Not a Trend
Talks between Washington and Tehran are stalled, according to an Al Jazeera analysis published October 27. Iran has set three conditions: relief from sanctions, an end to the American naval blockade and assurances against renewed attacks. In exchange it says it would restore normal traffic through Hormuz, while the United States is asking for more, including on nuclear issues.
Mohsen Rezaei, secretary of the Supreme National Security Council of Iran, repeated those conditions and added that frozen assets be released. A June memorandum brokered by Pakistan and Qatar unravelled, American strikes followed in July, and Iran retaliated against American assets and Gulf energy infrastructure.
Diplomacy is active but not converging. Officials from Saudi Arabia, Pakistan and Turkiye met Iranian officials in Tehran on October 26, and China said on October 27 that it will send an envoy.
President Donald Trump framed the choice publicly on October 25: "do I make a deal with them or do I finish them off?" Al Jazeera reports that he had said attacks would not take place before the midterm elections on November 3. A Reuters/Ipsos poll found 34% of Americans approve of his handling of the conflict, so the political cost of escalation is visible to the White House.
Attacks, Not Closure, Are Holding the Premium
The strait is not fully closed, but shipping is nowhere near pre-war levels, according to Al Jazeera. About one fifth of global oil and liquefied natural gas moved through it before the war. Diesel prices have nearly doubled.
Noam Raydan of the Washington Institute for Near East Policy counted 28 attacks on ships in the strait and nearby waters in October as of October 23, and 113 since the war began on February 28. He said, "October has seen the highest number of ship attacks on record." The International Maritime Organization counts 120 incidents in the strait and wider Middle East over the same period.
The consultancy Marisks said the week of October 5 to 11 had a dozen ships attacked, the highest weekly total since the conflict began. A Reuters review of IMO and MarineTraffic data found more than 30 damaged supertankers, 11 of them in October, which is about 3.5% of a global fleet of more than 900.
That is the mechanism behind the price. A fleet that is only 3.5% damaged is not a physical shortage, but each attack raises insurance, delays voyages and forces operators to decide whether to sail. The premium in Brent is a charge for that uncertainty, and it rises in weeks with more attacks.
Why Canadian Producers Capture Less of the Move
Brent prices barrels that move by sea, which is where the disruption sits. WTI is priced for barrels in North America, which the strait does not touch. Canadian crude is sold on North American benchmarks, and the United States is its main export market.
Since July 28, Brent has risen from US$84.09 to US$113.88 and WTI from US$79.26 to US$99.90. A Canadian producer that sells at WTI-linked prices has seen an increase of about US$21 a barrel, against US$30 for a seaborne producer. The spread of US$13.98 was US$14.05 on October 26, the widest in the series, and was US$2.91 on September 17, the narrowest.
The Canadian dollar has held up. It took 1.4013 Canadian dollars to buy one American dollar on October 27, compared with 1.4217 on October 13. A stronger Canadian dollar trims the Canadian-dollar value of a barrel priced in American dollars by roughly the same 1.4%.
The consumer side is not discounted in the same way. The 27.8% gasoline increase in September CPI already reflects the move at the pump. The result is a gain that arrives partly through producer revenue and partly through household inflation, and the Bank of Canada decision today is where the second part is tested.
Base Case, Tail Risks and What Would Change Them
The HDQ base case is that no comprehensive agreement is signed before November 3. Both sides have named conditions the other has not met, the June memorandum has already failed once, and, according to Al Jazeera, Trump had said attacks would wait until after the election. Under that case Brent stays above US$100, with the size of the premium following the weekly count of ship attacks.
There are two tail risks. The first is an agreement that restores Hormuz traffic, which would remove much of the premium quickly because the price rose from US$72 on supply fear. The second is escalation after the midterms, which those remarks leave open and which would add to the 113 attacks already recorded.
Three signals would change the read. A Chinese envoy reaching Tehran with a concrete proposal, a drop in the weekly count of attacks from the October 5 to 11 level, or a public change in the American position on the naval blockade would each move probability toward a deal.
The two risks cut in opposite directions for Canadian portfolios. A deal lowers gasoline inflation and eases pressure on the Bank of Canada, but it also lowers WTI and energy earnings. Escalation does the reverse, which makes oil a hedge against the risk it creates.